| Up Front | News | Brand | Watch | Feature | Trends | TECHNOLogistics | Black & White |
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Looking Ahead
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Indian economy firmly on the fast track Reliance expects 10-fold growth for RIL in five years RIL invests fresh dose of Rs1200cr in retail operations Vague retail FDI guidelines affecting PE fund inflow Govt may consider FDI in multi-brand retailing India Inc call for opening of FDI in retail & implementation of GST
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 The performance of our economy for 2009 – 10 is out and the results are impressive. India’s economy grew at 7.4% - much faster than the 7.2% expected. The gallop was especially strong in the fourth quarter – 8.6%. This indicates that the economy is ready for big growth this year. Industry grew at a robust 9.3% against expectations of 8.2%. While services growth was high at 8.5%, they were below estimates of 8.7%. The good results notwithstanding, a number of concerns persist. This includes inflation further fueled by the recent steep petrol price hike and the possible in private consumption. The slowing growth in some developed countries is not helping although our exports seem to be rebounding. However, overall there is a feeling of optimism with observers expecting the economy to grow this year at th Read More
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Strategy Refinement
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Bata to open only large formats, shut little corner stores Aditya Birla Retail re-strategizes growth path Cantabil heading to smaller towns
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 Retail India is busy strategizing on how best to tackle new opportunities and challenges. One such move is to go in for larger formats. The other is to head for virgin areas such as smaller towns. Bata India Ltd has done a paradigm shift from its earlier small-store-in-every-corner retail strategy. The company will now focus on large stores of over 3,000 sqft. The shoe major has plans to open 210 stores in the next three years with an investment of Rs200cr. Bata India had launched 69 large format stores in 2009 and shut 73 small format stores that were deemed unviable. Another 24 loss-making stores will be shut in 2010.
PM Sinha, Chairman, spoke to the media at the Company’s 77th annual general meeting and said, “We have seen large format Read More
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Expansion & Growth
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Bharti Retail on expansion spree-to double store count this year Reliance Retail to invest in new retail space
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 Bharti Retail, promoters of Easy Day stores, plans to double the count of its stores by end 2010. This will take the number of its Easy Day supermarkets to 125 from 60 and Easy Day Market hypermarkets to 13 from then existing six. Until now Bharti Retail has stayed confined to the regions across Punjab, Rajasthan, Haryana, Delhi and Uttar Pradesh and Rajasthan and the new store openings will only be in North India. However, future plans call for a wider geographic spread. Over five years an investment of $2.5bil will add 10 mil sqft of retail space. Raj Jain, MD and CEO of Bharti Wal-Mart has credited the softening of real-estate prices and positive response from the two partners for acceleration in expansion plans. Bharati Retail had signed an equal JV with Wal-Mart in 2007. Read More
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International tie-ups & JV’s
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Global premium brands look to India for growth Raymond Weil, Zara, Paul & Sharks set shop Gap keen to enter Indian market Yum! India expects $100mil profit in five years
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In view of the slow economic recovery in US and the shaky Euro zone, overseas retailers are focusing on the growing economies of India and China. However, observers have reservations on the success rate of luxury and super-premium brands. These observers feel that the brand consciousness that the West is prevalent in West has not established itself in India as yet. Noth withstanding reservations, retailers of high-end goods of every category from watches, luxury apparels, home linen, hand bags etc, are renewing their commitments in India. Brands such as Raymond Weil, Paul & Sharks and Zara are some who have entered the Indian retail arena recently with Indian tie-ups.
 Raymond Weil has set up its 100 per cent subsidiary in India besides openin Read More
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Government & Legal
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Delhi high court stays service tax levy on commercial rentals
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 The Delhi high court has brought joy to the organized retail industry by staying the levy of service tax on commercial rentals, which the finance minister Pranab Mukherjee tried to impose a second time. Chidambaram had proposed in his 2007-08 budget that a 12% service tax on commercial rentals be levied, but in 2009 a division bench of the high court stayed that proposal.
The Delhi high court had said, “Service tax is a tax levied on value addition provided by the service provider and there must be a connection with the service and some value addition by the service. If there is no value addition, then there is no service.” The court order had further stated that the mere renting of commercial space cannot be regarded as a service.
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RBI asks Real Estate firms to restructure FDI deals
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 In view of the new FDI guidelines, Reserve Bank of India (RBI) has asked a dozen odd companies in the real estate sector to restructure their deals with the foreign investors. The local real estate firms had brought in FDI by selling convertible papers to offshore funds and strategic players. The foreign PE funds and overseas investors would customarily link the number of shares on conversion to the performance of companies in which they invest. As a result the promoters of firms that have performed badly will suffer a significant dilution in their holdings, since a company which does well has to convert less shares than one which misses its targets. The new FDI guidelines question this practice. In response to the standard forms submitted by companies a month after issuing securities to non-resi Read More
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Vishal to move Delhi High Court over restrictive asset sale order
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 Vishal Retail, which finally saw robust sales in the last two months, is planning to seek relief from the Delhi High Court from an order that was passed on May 11 on a petition filed by Vishal's Singapore-based creditor DBS Bank, which prohibits it from selling its assets before November 25. Vishal Retail is hopeful of making a sale of nearly Rs1,800cr this fiscal. Read More
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Indian retailers abroad
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Café Coffee buys out Czech chain Café Emporio
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 Cafe Coffee Day (CCD) of Coffee Day Resorts Pvt. Ltd has made its first international acquisition with buying out the Czech cafe chain Cafe Emporio for Rs15cr in an attempt to establish a foothold in Europe. Cafe Emporio has 11 cafes in the Czech Republic. CCD, which has 917 outlets across India, four in Vienna and two in Karachi has been in talks with firms in Poland, Hungary, Slovakia and Russia. Swetha Shetty, president (international business) at CCD said that CCD would grow “organically” and through acquisitions, but it would prefer the latter. Coffee Day Resorts Pvt. Ltd raised Rs960cr from three PE investors, the funds being utilized to add more coffee shops to the chain and make acquisitions in China, West Asia and eastern Europe. Another 10-15% of the revenue is expected to be raised from Read More
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USA
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Wal-Mart buys stake in Green Dot
 Wal-Mart Stores Inc has taken a minor stake in Green Dot Corp, the prepaid debit card seller, in a move that would give the US retail giant indirect access to the US financial space. In a filing with the US Securities and Exchange Commission this month. Green Dot said it had issued 2,208,552 shares of Class A common stock to Wal-Mart. The stake would represent less than one percent of the combined voting power of outstanding Class A and Class B common stock after offering, Green Dot said. Amazon to re-launch online clothing and shoe biz Read More
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EUROPE
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Tesco upbeat on rising international sales
 Due to good growth in US and Asia, British retail major Tesco has reported a 8.2% increase in sales for the 13 weeks ended May 2010, with a 11.9% increase in International sales for the same period. Tesco is due to open its first cash & carry store in India by year end. In Asia, sales rose 15.4% and the growth was supported by new store openings. An increased number of customers pushed up sales in the US by 37.8% for the 13 weeks ended May 2010. Terry Leahy, CEO Tesco said, “The long-term global recovery is well underway, although the pace and strength of economic recovery varies across our markets.” About the plans in India, he reported a satisfactory progress and said, “Our Read More
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License India to put up Brand Licensing and Merchandising Show
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 License India, a division of Franchise India, is holding an international conference, Brand Licensing and Merchandising Show, on 9th-10th July, 2010 at Hotel Crowne Plaza, Okhla, New Delhi. The event has been organised to provide business platform for Indian brands, manufacturers and exporters to enter the licensing industry.
Leading the conference will be Martin Brochstein, SVP Industry Relations and Information, International Licensing Industry Merchandisers’ Association (LIMA). Some of the other key industry experts sharing their perspective will be Roshni Bakshi (Disney), Devender Chawla (Pantaloons), Ameet Datta (Luthra & Luthra), Anurag Rajpal (Spencers’), Ashish Kulkarni (BIG Animation) amongst others.
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Fossil introduces the Eco-Friendly watch – Sundial
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 Fossil, a US based global design, marketing and distribution company that specializes in consumer fashion accessories has launched a unique product which utilizes the ancient timekeeping technique of the ‘sundial’ to tell time. The watch must be aligned to the north. The time can be determined by the shadow that falls across the dial. As the name suggests, these watches make use of sunlight to indicate the time, making it an eco-conscious watch. It has no battery or any other moving parts. Other prominent features are the antiqued silver tone face with wood accents, a buckle clasp, stainless steel case and an impeccable black genuine leather strap. These watches are available across select Shoppers Stop and Lifestyle stores and are priced at Rs3995. Read More
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People
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MS Banga joins CD&R as special partner
MS Banga has joined the $100bil private equity fund Clayton, Dubilier & Rice (CD&R) which has operations in London and New York. Banga, better known as Vindi, had put in his papers at Unilever in March this year after 33years with the firm. He had not being chosen for the vacant post of CEO.
At CD&R, Vindi would be joining A G Lafley, former Chairman of Proctor and Gamble (P&G) and Jack Welch, former GE Chairman, both among others as special partners with CD&R. Elaborating on his role in the new assignment, Mr Banga said he would be working with other partners to look for good investment opportunities, screen them and decided which to pursue. CD&R works for business transformation and has managed investments of more than $12bil in 46 US and European businesses representing a broad range of industries. The reason for joining CD&R, according to Vindi, is "... all my life my experience is in business transformation. Secondly, the firm has got very talented corporate leaders like Lafley and Welch."
Amul’s Vyas quits MD post as board split over chairmanship
 BM Vyas, MD of the Rs8,000cr Gujarat Cooperative Milk Marketing Federation (GCMMF) that owns country’s largest food brand Amul, has resigned from his post in the wake of the intense politicking over the chairmanship of GCMMF.
Vyas was hand-picked by the Amul founder Dr Verghese Kurian and has been credited with the phenomenal growth and diversification of brand Amul, from being a milk & butter brand to cover a large segment of dairy and food products. His service contract is due to end on November 30, and he is already on a five-year extension. According to existing chairman Parthi Bhatol, he has requested to be relieved from June 30. It is not clear yet if the Amul board would accept his resignation.
The cooperative has a nearly 27 lakh farmer members that are being viewed as a vote bank by the politicians, who have been trying to control the organization. Kurien had successfully kept the farmers out of Amul for the three decades he was in charge since it was founded in 1979.
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Vishal Retail Q4 reports 12.38% rise in net loss
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 The debt ridden discount retail chain Vishal Retail’s filing at the Bombay Stock Exchange reported a 12.38% rise in net loss to Rs128.93cr for the March quarter, which was at Rs114.73cr during the same quarter previous fiscal. However, the retailer registered a growth of 9.34% during the fourth quarter at Rs254.64cr as against Rs232.89cr in the same quarter of 2008-09. The total losses for the fiscal ended 31 March were at Rs414cr compared with Rs94cr a year ago, after writing off inventory worth Rs342cr. Revenue was down 16% to Rs1,105 crore, from Rs1,323 crore a year ago. Founder and managing director R.C. Agarwal attributed the poor performance of his company to the recession and is hopeful of quick recovery. Read More
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Pantaloon Retail’s 26lakh DVRs traded by promoters
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 Nearly 26 lakh differential voting rights (DVR) shares of Pantaloon Retail, amounting to more than 1%, were traded on the BSE last week by seven promoters including Kishore Biyani, who sold all their shares to PFH Entertainment, the film production company of Future Group. The shares were sold at an average price of Rs 279.6/DVR and bought at Rs278.87/DVR. PFH Entertainment, having bought DVRs for a total of Rs72.2cr, will now hold 16.3% on the DVRs. Pantaloon issued shares with DVRs (along with their bonus issue) in February 2009. These bonus issue shares were offered in the ratio of one bonus share with differential voting rights for every 10 equity shares held by shareholders on the record date. On March 31, PFH Entertainment sold 3lakh DVR shares to Pantaloon Industries Ltd at Rs254/share. Read More
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NV Retail Index
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The NV Retail Index on last Friday was110.74. There was an increase of 0.40 points (0.36%)Read More
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DLF shows growth in sales volumes, prices
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 In the fourth quarter ended March 2010, DLF has shown a 77% growth in sales to Rs1,994cr and 168% increase in net profit to Rs426cr, as compared to its numbers a year ago. This might have been aided by its low base but improvement in volumes and debt pre-payments has allowed the company to get back to the growth track. However the full year’s sales of the Company for FY-10 were at Rs7421cr, nearly 35% below that of FY-09 and nowhere near that of FY-08 which was DLF’s best at Rs14,432cr.
There is the concern that a higher home loan rate could affect its mid-income project launches and the yet to pick-up commercial sector. As a result of improvement in average selling price and volumes, DLF’s operating profit margin for the quarter ended March 2010 rose 46%, Read More
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Unitech promoters raise stake in company
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 The promoters of country's second largest realty firm, Unitech have increased their stake in the company by 0.42% points to 46.72% by converting warrants worth Rs76.44cr.
The statement issued by Unitech said, "The committee of directors of the company in its meeting held on June 18, 2010, has allotted 2,00,00,000 equity shares of Rs 2 each at a premium of Rs 48.75 per share to Harsil Projects Pvt Ltd, a promoter group company." It added that the promoters have paid Rs76.44cr for the conversion of two crore warrants.
Early this month, the company had announced that its promoters had increased their stake to 46.30% from 45% by converting warrants worth Rs224.78cr. In March also, the promoters had raised their stak Read More
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New DTC is a mixed bag for real estate investors
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 The new Direct Tax Code (DTC) has changed the definition of short term and long term investment in real estate. As per existing definition, a property has to be held for three years prior to selling for the investment to be called long term. This term is being shortened to one year as per the new DTC. This becomes critical since the tax rules are different for profits accrued from short and long term investments. Short-term profit is added to the income and long-term profit gets a 20% tax rate, after it is indexed for inflation. The other change is that in the base date for the calculation of tax on the value of the property will be shifted from 1 April 1981 to 1 April 2000. The impact of this depends on the age of the property. Says Hemal Zobalia, executive director, KPMG: “You stand to gain if your property is old Read More
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Do grotesque ads entice consumers or incite them?
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By Neelima Mishra Agrawal
 An advertisement campaign for a luxury product from a high end brand would normally follow the pattern of a bevy of pretty models in exotic locales, projecting fairytale levels of happiness and perfection. That would seem to be the right thing to do – associate beauty and perfection with the product to make it desirable. But that has been so done to death. The new trend is to go against the grain, turn the whole established concepts on their heads, break free, and more essentially- provoke a reaction. Pick up any glossy of the caliber of a Vogue or Vanity Fair and the pages are covered with such macabre advertisements of popular luxury brands that would delight Marquis de Sade. The latest is a Jimmy Choo ad campaign that shows visuals of a dead woman slung inside the trunk of a car while music impresario Quincy Jones is digging a grave. There is another Jimmy Choo ad showing a woman who has murdered a man, a Prada ad showing a bruised woman sitting on a park bench at night, a Dolce & Gabbana ad featuring a  model about to slice off another model’s head, a woman fishing out a Jimmy Choo bag from a pool with a male corpse floating alongside, another Dolce & Gabbana ad with the theme of a gang rape. They are bizarre, deviant and incredibly violent, the emphasis being more on sexual violence. Do such ads lure customers? Several theories have been propounded but the scariest of them all, a research from The Journal of Consumer Research says that it is because ‘women like it’. The study is yet to be released later this year and is certain to tri Read More
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GREEN TRENDS
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Marks & Spencer (UK) reveals results of Plan A
 Marks & Spencer heralded sustainability initiative Plan A seems to be a success. According to an M&S official statement, the company has been able to save and reinvest GBP 50 mil. Some of the other beneficial results include:
- 20% reduction in food packaging
- 19% increase in energy efficiency in store
Read More
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NATIONAL TRENDS
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Future Group leverages auspicious days to boost sales
 The recent auspicious day of Akshaya Tritiya was milked by retailers like Big Bazaar to lure the customer to buy gold and other such valuables, chalking up sales of Rs150cr. Ashni Biyani, director of Future Ideas, a part of the Future Group confessed that they consciously tap the potential of such auspicious days (nearly 150) by checking out the Panchang (Hindu almanac). In fact a special team of experts on Indian mythology and religion was set up six months ago. This is another of Future Group’s clever marketing strategy which in the past has included ‘Sabse Sasta Din’. Its TV blitz for Akshaya Tr Read More
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WORLD TRENDS
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SUBWAY opens innovative restaurant at Ground Zero in NYC
 Sandwich chain Subway has opened an innovative restaurant at Ground Zero in New York City. The restaurant, which serves construction workers building the Freedom Tower, a replacement of the demolished World Trade Towers, is housed in shipping containers and rises on a hydraulic platform as the tower is being built. The Subway restaurant has been subcontracted by the company fabricating and installing all the tower's structural steel and allows workers to get lunch and get back to work without having to go down to stre Read More
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NATIONAL
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Advanced food & drug recall systems on the anvil
 Indian retailers may be the beneficiaries of a new advances system that can seamlessly track food and drugs in the supply chain. The system is used to identify and recall contaminated products seamlessly including at the retail level. The GS1 Systems works through key standards such as barcodes, electronic business messaging and radio frequency identification (RFID) technology to track products. Alerts can be sent by mobile or through the internet so that they can be acted on immediately. The new system has been developed by the Brussels based GS1 – the most widely used supply chain standards system. The India office has initiated talks with the Read More
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INTERNATIONAL
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Marks & Spencer rolls out ‘click & collect’ service
 UK based Marks & Spencer is rolling out its Shop your Way click & collect service to Simply Food stores. The move follows a trial at 11 Simply Food stores before Christmas. Shop your Way, the internet based service, is now available in 86 Simply Food stores and is expected to be rolled out to 144 convenience stores by the end of the summer. The service is already available at Marks & Spencer’s larger variety stores. Sales through the company’s Direct business rose 27% this year to GBP413 million and Sir Stuart Rose, Chairman said the target of GBP500 million this financial year was in “sight". Read More
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IN BLACK & WHITE
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 "You will recall that one of the key strategic imperatives of Reliance Retail was to address the food supply chain, and to build deep relationships with customers, farmers and other producers. I am glad to report that our concerted efforts in this direction over the last three years have already made Reliance Retail the largest food retailer in the country.” Mukesh Ambani, Chairman, Reliance Industries
 “The More (hypermarket) network has just turned cash positive. We want to be EBITDA positive by 2012 and PAT positive by 2015.” Thomas Vargehese, CEO, Birla Retail
 “Our stated objective is to increase local sourcing to be at least 70% of our overall sourcing." Nandini Sethuraman, Head of Marketing, Marks & Spencer Reliance
India
 “We (at Future Group) are mapping all the communities in India on how they shop and how these (religious) calendars work. We understand intuitively, their customs and their rituals (and how to utilize these to maximize sales).”
Ashni Biyani, Head, Future Ideas
 “Rent is a cost to us and you cannot tax a cost. It was a wrong step (to charge service tax).” Govind Shrikhande, Chief Executive, Shopper's Stop
 “The Euro zone is in a mess. It will take time to recover. But India and China is where the action lies. India is a fast moving market with huge potential in terms of economy and development.” Olivier Bernheim, President and CEO, Raymond Weil
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